What are Implicit Costs? Example and Definition

An implicit cost is any cost already incurred but not explicitly expressed or reported as a separate expense. It reflects the value of opportunity that occurs when an organization uses internal capital for a project without any precise reimbursement for resource use. What are Implicit Costs? In economics, an implicit cost also called an imputed … Read more

What are Equity Issuance Fees?

Issuance Fees are those expenditures associated with underwriting and issuing debt securities and equity securities. Issuance costs include audit fees, investment banking fees, legal fees, marketing expenses, and Securities and Exchange Commission (SEC) registration fees. Issuance costs do not include any expenditures that must be made by a publicly-held company on an ongoing basis, such … Read more

What is the Cost of Goods Manufactured (COGM)?

The Cost of Goods Manufactured (COGM) is an accounting term that signifies the total cost of manufacturing products and transferring them into finished goods inventory during a set accounting period. That means the Cost of Goods Manufactured (COGM) only accounts for finished products that have either already been sold or are ready to be sold. … Read more

What is cost allocation? Explained with example

Cost allocation is a key factor in any business’s profitability. Business owners can use cost allocation findings to evaluate staff performance. The process of cost allocation involves calculating both direct and indirect expenses, such as factory labor and small quantities of materials. What is cost allocation? Cost allocation is the method business owners use to … Read more

What is Ancillary Revenue? Explained

Ancillary revenue is revenue that is derived from goods or services other than a company’s primary product offering. Examples include concessions at sporting events, baggage handling or seat selection revenue received by airlines, restaurant revenue received by hotel owners, and car-wash services sold by gas stations. Ancillary revenue may exceed primary revenues, leading to changes … Read more

What is Annual Income? Explained with Example

Annual income is the amount of income you earn in one fiscal year. Your annual income includes everything from your yearly salary to bonuses, commissions, overtime, and tips earned. You may hear it referred to in two different ways: gross annual income and net annual income. Gross annual income is your earnings before tax, while net annual income … Read more

What is Activity Based Costing?

Activity based costing (ABC) is a costing method that identifies activities in an organization and assigns the cost of each activity to all products and services according to the actual consumption by each. Therefore this model assigns more indirect costs (overhead) into direct costs compared to conventional costing. Companies have expressed frustration with arbitrary allocations … Read more

What Are the Types of Costs in Cost Accounting

Cost accounting is a form of managerial accounting that aims to capture a company’s total cost of production by assessing the variable costs of each step of production as well as fixed costs, such as a lease expense. What is costing? Costing, or cost accounting is a system for determining a company’s cost of production. … Read more